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The S&P 500’s didn’t ship the form of leads to 2025 that traders have grown used to over the previous decade. A number of headwinds have gotten in the best way, from renewed commerce tariffs to issues over Federal Reserve coverage.
Whereas American markets have wobbled, an index tracker nearer to dwelling has stolen the present.
The iShares Core FTSE 100 ETF’s (LSE: CUKX) up 13.8% 12 months so far, in contrast with the S&P 500’s 9.3% acquire. That makes it one of many world’s best-performing ETFs up to now this 12 months.
Its prime holdings by weight are a Who’s Who of British blue-chips: AstraZeneca (7.81%), HSBC (7.39%), Shell (7.14%), Unilever (5%) and Rolls-Royce (4.1%). The expense ratio is a really slim 0.07%, which implies a lot of the returns are handed again to shareholders.
However it’s value noting that this 12 months’s stellar rise is uncommon and doesn’t occur typically. Since inception, the ETF’s delivered annualised returns of seven.41% — broadly in step with the typical returns of the FTSE 100 (when together with dividends).
Over a decade, that works out to a cumulative return of 113.5%. Not unhealthy for a low-cost, set-and-forget fund.
A greater choice?
Regardless of the sturdy displaying from the ETF, I discover myself extra drawn to a different fund solely. The Scottish Mortgage Funding Belief’s (LSE: SMT) delivered even stronger positive aspects up to now in 2025, up 14.7% 12 months so far.
Extra importantly, its long-term monitor document’s way more spectacular. Since September 2005, the belief has generated a exceptional 1,274% complete return. That’s equal to annualised returns of 14% a 12 months over the previous 20 years.
After all, previous efficiency isn’t a assure of future returns. The fund’s heavy publicity to US tech provides focus threat and international forex threat if the greenback loses worth.
However Scottish Mortgage has one thing {that a} simple FTSE 100 tracker can not match — true world diversification.
Sure, the portfolio focuses on high-growth know-how names akin to Nvidia, Microsoft and Meta. However it additionally invests in retail innovators together with Meituan and MercadoLibre. Plus, it boasts healthcare performs akin to Moderna and even personal fairness holdings together with SpaceX and Databricks.
This unfold throughout industries and geographies helps cushion the belief from region-specific dangers and exposes it to a few of the world’s most enjoyable companies.
What it means for traders
The S&P 500‘s long been regarded as the benchmark for equity performance. Yet in 2025, it’s been left behind by a easy FTSE 100 tracker — and the extra adventurous Scottish Mortgage.
That underlines the significance of trying past Wall Avenue when selecting shares. When constructing a portfolio with a multi-decade outlook, diversification’s crucial to keep away from prolonged losses from focus threat.
For these eyeing a low-cost option to mirror the efficiency of the FTSE 100, the iShares ETF appears a smart choice to think about.
However for traders who’re keen to embrace a little bit extra threat in alternate for increased diversification and development potential, I believe Scottish Mortgage could possibly be an excellent higher fund to have a look at over the long term.
